We just received this notice from BofA regarding FHA's new policy:

Mortgagee Letter (ML) 14-15

Effective October 1, new Housing and Urban Development (HUD) guidelines require agents to have the property listed on the Multiple Listing Service (MLS) for a minimum of 15 days before any purchase contract can be reviewed by the servicer.

Note: The 15-day requirement starts when the property began listing on MLS at the appropriate price in relation to the Federal Housing Administration (FHA) "as-is" appraised value.

Additionally, the FHA Preforeclosure Sale Addendum & Real Estate License Certific... has been updated on the Agent Resource Center (ARC) under the Forms & Tips tab.  Please discard any previous versions you may have and begin using the updated version immediately. 

So let's get this straight.. The way BofA SHOULD handle FHA deals is now like this:

  1. Submit Application to participate
  2. BofA orders appraisal
  3. BofA Issues the Approval to participate with appraised value listed
  4. List agent changes List price on MLS to match value as shown on the Approval to Participate
  5. 15 days later seller can accept an offer and send to lender
  6. Lender issues approval.
HOWEVER,  BofA Won't Open an FHA Short Sale without an offer, right?
So then are we now following this procedure instead? 
  1. List house on the MLS for fair market value
  2. Find buyer and sign contract, send that to BofA
  3. BofA opens file in their system
  4. BofA orders appraisal
  5. BofA Issue Approval to participate with appraised value listed
  6. Seller breaks contract with Buyer because offer came in prior to the 15 days following approval to participate.
  7. List agent changes List price on MLS to match value as shown on the Approval to Participate
  8. 15 days later we can accept an offer and send to lender, which can be the same as the previous offer if buyer is still the HIGHEST AND BEST offer.
  9. Lender issues approval.
Am I missing something or is the way it will happen from now on?
-Neil

Views: 1431

Replies to This Discussion

The problem is that a lot of banks are trying to make the ordering of the short sale appraisal contingent on having a sale contract in place already. Of course due to the 15 day rule that contract is worthless anyway.

I wonder if its listed as active contingent would that count for the 15 days?   Since with the status as active contingent back up offers can still be submitted.   

Here's the best solution of all and frankly, I don't understand why it has happened already. Bank of America executes the FHA short sale process so BADLY, HUD should move all FHA servicing to other servicers. I hear B of A, FHA and short sale all in the same sentence and I literally run away. It is absolutely ludicrous how poorly they perform. This program is a simple program, the simplest of all of them yet an agent can count on a year or longer to complete one with B of A. I've had opportunity to successfully close many FHA short sales with other servicers while still waiting for the one stray B of A sale that is now with upper management at HUD. Several of those started long after this one started. They ignore you, they lie to you, they change file owners 10 times, they make stuff up because they don't know the correct answer. I seriously don't understand how a vast majority of them manage to collect a paycheck. The management team is no better. Not sure many of them are even real people because they never respond by email or phone call.

My advise is to use the servicing center as much as you can. The more they hear from us, the more they will understand how much a change is needed. Also use your local associations, your state associations and NAR to communicate how difficult it is to work with this servicer, particularly on this loan type as well as VA. Not sure about your markets but where I am, short sales are coming back with a vengeance and many are FHA. Many of those FHA are the homeowners who have been trying a year or more to work with their bank only to be turned down or to have just given up because they've gotten the royal run around from servicers like B of A.  Good luck out there!

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